Over the last few years, there have been unprecedented declines in medical practice revenue. More care providers are struggling to ensure revenue streams stay consistent and pin down revenue leakage in healthcare. Look at the top reasons a medical practice experiences dip in revenue, and the solutions that can prevent the loss.
Reasons Your Medical Practice is Losing Money
#Reason 1 – Claim Denial or Rejection Management
An important component of medical practice financial management is mitigating billing claims rejections as much as possible. Up to 10 percent of medical claims are denied annually, and 86 percent of claims that do get denied can be prevented. Consistently track filed claims and make sure the administrative staff knows how to both prevent rejected claims with proper initial inputs and how to handle a rejection when it happens. One idle, unpaid claim may not seem like much, but over time, rejected claims could easily mean a huge loss.
#Reason 2 -Too Many No-Shows
In total, missed appointments cost the healthcare industry roughly $150 billion a year. The average cost of a no-show to the provider is about $200. Therefore, avoiding missed appointments is vital to avoid revenue leakage in healthcare. Make sure to have automated systems in place for patient reminders, such as automated phone calls or text messages. Have clear policies regarding policies on missed appointments as well.
#Reason 3 -Inaccurate Medical Coding Practices
Clean coding with claim submissions helps deter the risk of initial claim rejection and keeps the medical billing profit margin in check. Miscoding things like elective services, supplies used during treatment, and bundled services can cost a practice tremendously. In one case study, a family practice had coding errors in over 70 percent of claims, which costed that practice $185,000 within a single year.
#Reason 4 -Lost Productivity
Just one fee-per-service loss daily can result in as much as $15,000 in annual revenue leakage in healthcare. Unfortunately, most practices see less than the optimal number of patients simply due to lacking productivity. Lost productivity can stem from:
- Not offering the services patients would expect from the provider
- Physicians and primary care providers spend time on paperwork and administrative tasks
- Not using the appropriate technologies, such as an efficient EHR system or automated phone system to handle calls
- Under booking or overbooking patients
- Spending too much time with patients due to complex services or lack of prior understanding of the patient’s needs
#Reason 5 -Excessive Overtime and Overstaffing
Paying overtime due to understaffing quickly adds up. Keep in mind, when paying time-and-a-half per worked hour, it is more feasible to be paying a standard hourly rate for the same duration. If the practice is consistently having to keep employees over 40 hours a week, it may be more economical to hire someone new. Overstaffing can be just as costly. For example, if all employees are in the office on the same days but not everyone has something to do, the practice is paying the extra staff with no valuable output.
#Reason 6 -Petty Theft and Embezzlement
Petty theft of practice supplies affects medical practice revenue but commonly gets overlooked. Whether it is administrative supplies like reams of paper, markers, or boxes of pens, or practice supplies like gloves, gauze, and syringes, this kind of theft adds up over the course of a year. Embezzlement could lead to thousands of dollars’ worth of lost profit as well. These issues can be avoided by conducting regular inventory check and properly monitoring and vetting practice employees.
#Reason 7 -Improperly Updated Fee Schedules
Fee schedules should be revisited and updated periodically to align with the RBRVS (resource-based relative value scale), which is established by the Centers for Medicare and Medicaid Services. One fee that is set too low can easily cut into medical practice revenue. For example, if the practice is charging $10 below RBRVS for an in-office screening, this could mean thousands of lost dollars over time.
Ways to Stop Revenue Leakage in Healthcare
1. Improve Collection Methods
Create a fool-proof practice collection process. Make sure your physician practice revenue cycle is matching billable service hours. The longer a claim sits idle, or a bill goes unpaid by cash-paying patients, the more money the practice loses due to cash flow issues. Make sure the practice has a clear-cut plan for billing and collections. Follow up-to-date coding practices and establish clear rules for patient payments that patients understand before services are rendered.
2. Keep Urgent Care Patients
Urgent care clinics are now available across the country. Moreover, many patients opt to visit one of these clinics over their standard doctor due to easier access to care and potentially lower costs. If your practice takes a revenue hit because more patients are visiting an urgent care clinic, focusing on keeping urgent care patients is a must. Doing so may mean adjusting practice hours to accommodate urgent appointment requests, bringing in more staff, or even adopting a telemedicine protocol to keep patients coming to the practice.
3. Adjust Your Marketing Strategy
If medical practice revenue falls due to lacking patients, your marketing strategy may need an adjustment. Look at:
- Your social media pages and how well they are performing, or the messages sent to customers
- Printed marketing materials handed out in-office or sent via mail
- General online reputation with patient reviews, negative press
- Email, newsletters, and direct marketing strategies
Keep in mind, three of five patients choose providers due to a positive online presence.
4. Consider Monetizing After Hours
When looking for ways for physicians to make extra money, oftentimes, the best place to start is the hours of availability. Bringing in patients after typical office hours expands the potential for new revenue. Instead of relying on a local emergency room for advice or treatment, patients prefer to see their doctors, but many doctors are unavailable beyond a certain time of day. Monetizing after hours may mean keeping a practice open later on weekdays, opening half days on weekends, or even simply offering telemedicine appointments when the office is normally closed.
Takeaways to Remember from PrognoCIS
While medical practice revenue can always ebb and flow, many revenue-affecting factors can be tighter controlled for a better outcome. If your practice is dealing with revenue leakage, assessing everything from billing practices to staffing may be a necessary move. Something as simple as an outdated EHR system can make all the difference in downstream revenue in healthcare. Ready to discuss a fully integrated EHR solution for your practice? Schedule a live demo with PrognoCIS.